Market Update

General - Van Eck - Strike - Berkeley - Horizon - Kingsgate - Crusader

Good afternoon

zinc looks like closing up for the first week in six...other metals also more constructive today. Perhaps we have seen the lows? A bit more direction would be good for the market, especially, as the world economy is looking pretty reasonable as well. Some upward direction might well trigger some renewed buying of the metlas themselves, and the companies producing them! Iron ore has been rising for the last few days as well, tarding at 66-67 US$/t - still a great price - alongside Steel Rebar.

Core inflation in Europe is rising, as is the Employment Cost Index in the US....GDP growth in teh States less than expected, but Chicago Purchasing managers Index very strong.

US-major tech stocks are just charging ahead, driven by excellent results - as is Australia´s proud, Atlassian, which is making a new high in Wall Street today as well - not to forget good old Macquarie Bank...just about to make new all time highs!


Van Eck have sold 12 mill Resolute, 15 mill Perseus, and 20 mill BDR over recent days ( the notices have to be made within 3 days of actual sales ). That´s certainly putting pressure on the sector in Australia. Recent outperformers have been the quality producers like Evolution, Oceana, St Barbara or Northern Star, all of which had good Quarterlies - and all of them are well managed! In my opinion, best buys are: Evolution - continuing rerating to a premium ( eventually ), based on reserve-growth, great cash-flow, and great management , and Perseus - confirmation of turnaround at Edikan in current Quarter will drive rerating...stock has a market cap of about 1.000A$/oz ounce produced in 2018/2019....great leverage to US$ gold price and improving production/costs, as already witnessed last Quarter. The stock might well test recent lows at 25-26ct - great buying!

Strike Energy - last Quarter was another Quarter to forget...they are mucking around with pump-imrovements - we have heard that for 12 month at least now! New management has started - great Chairman, very well connected, and a new MD, who is young, but makes an excellent impression - has good industry experience. They are currently reviewing all technical data etc, as well as staff. I believe we will see more new people, and a completely fresh and unbiased approach. The company ahs got 5.5 mill in cash + 2 mill to be received from State of South Australia + 1,6 mill available from R&D credit line....With 2.5 mill to be spent this Quarter, that is enough for the rest of this year, but not for a fresh approach. We will see over the next month or tow, how the new board/management willl tackle this. JV´s, equity raising / selling part of project/company to a larger company? We will find out, but I believe, that renewed enthusiasm and drive are with the company now! I continue to support the company! The price coould/still be substantial in the end. Yesterday, the Australian Premier announced new initiatives to help solve the current gas & power crisis in Australia: Australian companies may only export as much gas as they produce, and may only charge Australian customers the export price. This is very very positive for Strike: The large owners of Australia´s major LNG facilities on the East Coast are sucking every uncontraced gas from the local market into their plants, which have cost a combined 70 bill$ in capex. The problem is, that the ( still very large ) coal bed methane fields in Eastern Australia have not lived up to full expectations, and therefore, gas is short! Especially the Santos-led consortium is facing substantial shortages, and could be pushed into aquiring gas reserves/production to keep up their level of exports. I have little doubt, that Strike will be one of the companies they will have a look at!

Berkeley - their valuation has come under pressure for two reasons: Firstly, they have not come up as yet with the promised partner to buy a minority stake of the project,a nd provide financing, and secondly, uranium stocks generally have come under pressure, as the uranium price has given up part of the recent gains. Buy straw hats in winter - the project is a very good one, BKY have 30 mill US$ in cash, and the upside is very material from here. It might still take some time to get a partnering deal done - utilities are not the most adventurous companies under the sky! But latest by summer, I think they should be able to make a move. That´s not far away, even though it feels like winter today in Munich!!

Horizon - PAN´s offshoot has been disappointing so far. the company has done all the groundwork for drilling, which is only starting now, as the very wet weather in Western Australia has made things difficult last Quarter. HRN have established 14 drill-ready targets in the vicinity of their existing 1.25 mill oz resource, half of which is refractory. The company has also been spending time and money on finding alternative process-routes for this difficult ore, and has made some promising progress here. The only news, though, to drive the stock for now will be exploration success! Hopefully, they will deliver this in the current Quarter. The stock is very tight, so success could show up in a quick turnaround of the stock.

Kingsgate - by this Quarter end, they will have about 24 mill A$ or half the share price in cash. Nueva Esperanza, their sizable silver project in Chile, will see more $ spent on it shortly, and corporate activity in the area has been very substantial over the last few month. The upside from any compensation for the loss of the mine in Thailand could be substantial - but could also take some time. In the meantime, care & maintenance will cost them 1-1.5 mill A$/Quarter...that´s certainly a considerable drain. Undervalued, no doubt - but Australian institutions do not support the chairman at all!

Crusader - Quarterly not out as yet - but they have received enviromental approval for their Borborema Mine in Brazil, which is major good news, and represents THE most difficult license on their way to a full mining license. Normally, I would say that it´s a pure formality - but we have seen in numerous situations, that formalities can ( and normally:do ) take time in that country!!

have a nice long weekend!


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